Incentives, infrastructure and institutions: Perspectives on industrialization and technical change in late-developing nations

The current paper explores the role of incentives, infrastructure, and inst itutions in late-industrializing countries. We argue that all three dimensi ons are critical to understand differences in technological development and industrial trajectories across countries. because they shape government po licies and firm strategies in terms of exports, subcontracting, and technol ogy acquisition, among others. Moreover. we explain how recent insights in the theory of economic growth may be used to understand the incentive and i nfrastructure dimensions of development, even at a very micro level, but fa ll short of addressing institutions, a dimension our research has shown to be as critical. The paper analyzes these relationships through an in-depth analysis of the evolution of the auto industry in Taiwan and Mexico, charac terizing the three dimensions and associated policies as well as market and technology outcomes. The key implication for research is that advancing gr owth theory. so that we may have a better understanding of late industriali zation. requires a deeper micro research on the development patterns of the se countries. (C) 2001 Elsevier Science Inc.